…finds that top business performers have strategies that adhere to three common design principles that work to increase speed-to-market and control complexity—both critical in today’s fast-moving world:
– They focus on a highly-differentiated core business whose capabilities can be reapplied over and over
– They simplify communications between the boardroom and the “front lines”
– They constantly adapt their business model to meet key challenges and turn the art of constant improvement into a powerful strategic weapon
“Our research shows that the odds for achieving sustainable growth increase dramatically when companies build and deploy repeatable models,” said Chris Zook, co-head of Bain’s global strategy practice. “We find that market leaders consistently do three things better than their competition—they focus, they simplify and they adapt.”
Bain, in collaboration with the Economist Intelligence Unit, surveyed 377 executives from the United States, Europe and Asia from a cross-section of industries. More than two-thirds of respondents held either board seats or C-level positions in companies that ranged in size from less than $100 million in sales to more than $10 billion. Bain analyzed the revenue growth and profitability of companies represented and categorized them as either top, average or bottom business performers. Responses from the survey were correlated to the company clusters and studied to identify key design principles for top business performers.
Key findings from the survey of executives include:
Top performers focus on a highly-differentiated core business
– (Strongly) agreed nearly three-quarters of the time that “we have strong consensus in our management team around a clear and simple strategy”; twice as many as executives from bottom-performing companies
-(Strongly) agreed more than 80 percent of the time that “our strategy is built around a repeatable model that we constantly apply with a high success rate to new markets and segments”; bottom performers (strongly) agreed about 30 percent of the time
Top performers simplify communications between the boardroom and the “front lines”
– (Strongly) agreed roughly 60 percent of the time with the statement “our frontline understands our strategy and they are fully in line with top management”; bottom performers agreed 35 percent of the time
– (Strongly) agreed more than two-thirds of the time with the statement “we are able to replicate successes and best practices from one part of our organization to other parts (i.e. geographies, segments, product lines, etc.)”; nearly twice as often as those from the bottom-tier of performance
Top performers constantly adapt their business model to meet key challenges
– (Strongly) agreed six-times more often than bottom performers that “we are the best in our industry at capturing learning and driving continuous improvement in all key functions. This is a competitive advantage.”
– (Strongly) disagreed twice as often as executives from bottom-performing companies with the statements “there is too much variation in practices across our company. This reduces our ability to learn and to execute fast enough” and “we have too many and/or too complex IT systems.”
– (Strongly) agreed 71 percent of the time with the statement “we are good at taking decisions and executing them fast,” nearly three-times more often than bottom performers
– (Strongly) agreed more than twice as often with “we innovate and experiment in the field a lot. This drives our learning and is a competitive advantage”
– (Strongly) disagreed nearly four-times as often with “we do not highlight and confront the biggest challenges to our business model fast enough”
– (Strongly) disagreed two-and-a-half-times more often that “we are too busy fighting the daily battle to step back”
“The findings show a fundamental shift in the nature of strategy and competitive advantage,” concluded James Allen, senior partner and fellow co-head of Bain’s global strategy practice. “Nearly three-quarters of executives say that strategy is now more about their ability to sense and adapt and more than half expect to have a different key competitor in five years. Today’s speed of change, and the necessary responsive actions, is remarkable.”
